Cyprus Ends Cash Limit Ban

March 28, 2014

Depositors of the National Bank of Cyprus protested plans to seize much of their accounts and a limit on how much they can withdraw

NICOSIA — Cyprus scrapped all limits on daily cash withdrawals from banks March 28 in a significant loosening of capital controls that were imposed following the country’s painful financial rescue deal a year ago.

The easing of restrictions comes with the steady bolstering of confidence and stability in the banking system, the Finance Ministry said. Before the decree, the daily withdrawal limits were 300 euros ($412.8) for individuals and 500 euros ($688) for companies.

The decree also increases the amount of money that a person can move within Cyprus to 50,000 euros ($68,800) from 20,000 euros. The amount for companies was doubled to 200,000 euros ($275,180).

It also lifts a ban on accessing money in existing fixed term deposits before their maturity date. To encourage people who had pulled their money out of banks in the rescue’s aftermath to deposit with banks again, the decree allows people to open new accounts in any bank as long as they are a fixed term deposit of 5,000 euros or more.

Previously, opening a new account in a bank other than one where a customer already had an account was prohibited to prevent people from moving money from bank to bank and potentially starving a troubled lender of needed cash.

Cypriot authorities imposed the controls to head off a run because a key clause in its 10 billion-euro rescue plan involved the seizure of almost half of uninsured deposits in the country’s largest bank and closure of its second-largest lender. The plan was negotiated with other eurozone countries and the International Monetary Fund.

A ban on unfettered money transfers abroad remains in place. Authorities hope to eliminate that restriction by the end of this year.